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Boral returns to profit on housing rebound

Belinda Merhab

Housing market recoveries in Australia and the US should help Boral go from strength to strength after the building products maker swung back into the black.

Boral on Wednesday announced a net profit of $173.3 million for 2013/14, compared to its $212 million loss the previous year.

Chief executive Mike Kane said Boral's restructuring efforts and growth in Asia as well as strengthening housing markets in Australia and the US had helped deliver the turnaround.

"After reporting much lower earnings for the past two years, we have now clearly turned the corner," Mr Kane said.

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He said the Australian housing market was "very strong" and expected to remain steady into FY15.

But the string of rainy days this month would dampen Boral's operations, he said.

"Construction materials is a weather-impacted business, so when you have multiple days of rain in a row, as we've seen here in August, it significantly impacts our business," he said.

"It's still early in the year so it's difficult to gauge what the impact will be on the total year, we could see ourselves dry out as we move into the drier part of the year and we could get to catch up some of the momentum we lost in August."

Mr Kane said strength in the housing market and non-residential activity would be offset by a slowdown in roads and infrastructure activity.

While new projects had been discussed in the past year, it would take 18 to 24 months before construction begins.

"Eighteen months ago, not a lot of work was done to develop a pipeline," he said.

"The new (federal) government has placed more emphasis on those types of investment - I'm not saying the old government wouldn't have done it as well, I don't know, but I can tell you that they didn't, and the lack of doing that has a long term impact on our business."

Meanwhile, Mr Kane expects the US housing market to continue its recovery following a disappointing year that was marred by a harsher-than-usual winter.

"The winter months in the US dramatically slowed down our improvement in our performance and we'd have had an even better performance if the winter was milder," he said.

CMC chief market strategist Michael McCarthy said both internal and external factors were pointing to continued improved performance for Boral.

Although Boral's total revenue fell 1.6 per cent to $5.204 billion, that had occurred in what was still a tough operating environment, Mr McCarthy said.

"This is an industry in recovery still and this is a good result," he said.

"The company appears well placed to take advantage of any further upticks in broader economic activity."

Mr Kane said Boral was focused on improving its underperforming businesses through restructuring and a review of its global bricks and Australian timber divisions.

Boral shares were 24 cents higher at $5.63 at 1512 AEST.

HOUSING RECOVERY HELPS BORAL RETURN TO PROFIT

* Net profit of $173.3m for 2013/14, up from $212m loss in 2012/13

* Total revenue down 1.6 pct to $5.2b, from $5.3b

* Partly franked final dividend of eight cents per share, up from six cents